What constitutes a material default of the Hck Hot Chicken franchise agreement regarding the implementation of a payment system?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Any failure by Franchisee to implement such EFT system in strict accordance with Franchisor's instructions shall, without limiting the materiality of any other default of this Agreement, constitute a material default of this Agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Hck Hot Chicken Franchise Disclosure Document, a material default of the franchise agreement occurs if a franchisee fails to implement the Electronic Funds Transfer (EFT) system strictly according to Hck Hot Chicken's instructions. This system is used for the franchisee to pay Continuing Royalty fees, Brand Fund Contributions, and other fees directly to Hck Hot Chicken.
The franchisee is obligated to instruct their bank to make these payments via EFT or another automatic payment method designated by Hck Hot Chicken. Franchisees must also provide pre-authorized check forms or other instruments to allow Hck Hot Chicken to draw these payments from the franchisee's account. Additionally, franchisees must maintain at least one credit card account in good standing with a minimum credit line of $10,000 to cover any past due amounts if an EFT payment fails. The current EFT and credit card authorization forms are included as Exhibit I in the Franchise Disclosure Document.
Furthermore, the franchisee must maintain a single bank account for these payments and keep a minimum balance as specified by Hck Hot Chicken. Altering or closing this account requires prior written approval from Hck Hot Chicken. Compliance with these requirements, as detailed in the Hck Hot Chicken Brand Standards Manual, is crucial. Failure to adhere strictly to Hck Hot Chicken's instructions for the EFT system constitutes a material default of the franchise agreement.